Munoth Financial Services Ltd Directors Report

REVIEW OF BUSINESS OPERATIONS:

During the financial year 2023-24, the Companys total revenue has increased to INR105.89 lakhs from INR 50.72 lakhs in the previous financial year.

The Company has made a profit of INR 18.90 Lakhs in the current financial year as against a loss of INR 23.12 Lakhs in the last financial year.

Stock Broking:

Income from stock broking operations has increased to INR 37.79 Lakhsfrom INR 30.10 Lakhs in the previous financial year.

The Company provides institutional broking business and is empanelled with public sector banks and insurance companies.

Depository participant:

As a Depository Participant the company offers facilities to both institutional and retail investors to maintain their investments in securities in electronic form. Income from Depository operations has increased to INR 5.59 Lakhs from INR 5.35 Lakhs in the previous financial year.

Merchant Banking & Portfolio Management Services:

The Company continues to provide PMS services under both discretionary and non discretionary basis.

The Companys MBD division is providing valuation services in accordance with the requirement of the various acts/statutory requirements.

Income from Merchant Banking & Portfolio advisory services has decreased to INR 5.88 Lakhs as against INR 8.50 Lakhs in the previous year.

FUTURE PROSPECTS

The company will continue to focus on Investment Banking, Portfolio Advisory services and Institutional Broking business.

INDIAN ACCOUNTING STANDARDS (IND AS)

The Ministry of Corporate Affairs (MCA) on February 15, 2015 notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies .Ind As has replaced the previous Indian GAAP as per the Companies Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies 2013, (the Act) and other relevant provisions of the Act.The financial statements for the year ended March 31, 2018 are the first financial statements the Company has prepared in accordance with Ind AS with the date of transition as April 1, 2016.

DIVIDEND:

The Board of Directors has decided not to recommend any dividend.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:

The provisions of Section 125(2) of the companies Act, 2013 do not apply as there was no dividend declared and paid last year.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED BETWEEN 31ST MARCH 2024( THE END OF THE FINANCIAL YEAR AND MAY 29, 2024 (THE DATE OF REPORT)

There were no material changes and commitments affecting the financial position of the company between 31st March 2024 (the end of the financial year) and May 29, 2024 (the date of the report).

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO.

The Company has no activities relating to conservation of energy, technology absorption, foreign exchange earnings and outgo and hence the provisions of Section 134(m) of the Companies Act, 2013 is not applicable to the Company.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY:

The Risk Management Committee of the Company continuously monitors business and operations risk through an efficient risk management system.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

The Company has not developed and implemented any Corporate Social Responsibility initiatives as thesaid provisions are not applicable for the financial year 2023-24.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

The Company has not provided working capital loan, Guarantee or provided security. The details ofinvestments made by the company are given in the notes to the financial statements.

NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW:

The Company has conducted 4 Board meetings during the financial year under review. The board is presented with all the relevant information well in advance before each meeting on various matters affecting the working of the company and the Directors have separate and independent access to senior management at all timesThe Board meetings were held on May 30, 2023,August 14, 2023,November14, 2023 and February14, 2024.

AUDIT COMMITTEE:

The Audit Committee has Ms. Lakshika Mehta ( Chairman), Mr. Sakthivelmurugan Masagounder and Mr. Jaswant Munoth as members. All the recommendations made by the Audit Committee were accepted by the Board.

NOMINATION AND REMUNERATION COMMITTEE:

The Remuneration Committee has Mr. Sakthivelmurugan Masagounder (Chairman), Ms. Lakshika Mehta and Mr. Jaswant Munoth as members. The committee is vested with all necessary powers and authority to determine and recommend the remuneration payable to Executive Directors.

COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATIONAND DISCHARE OF THEIR DUTIES:

The Companys Policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished as Annexure 1 and is attached to this report.

SHAREHOLDERS RELATIONSHIP COMMITTEE:

Pursuant to Companies Act 2013, the Board of Directors had reconstituted Shareholders/ InvestorGrievance Committee with the new name Shareholders relationship committee. The committee specifically looks into the shareholders and investors complaints on matters relating to transfer ofshares, non-receipt of annual report etc. In addition, the committee also oversees the share transfers. The Committee has Ms. Lakshika Mehta (Chairman), Mr. Sakthivelmurugan Masagounder and Mr. Jaswant Munoth as Members The chairperson or the member authorized by him of each of the committees constituted under Section 178 attended the general meeting of the Company.

EVALUATION:

The aspects covered in the evaluation included the contribution made by the Directors to the corporate governance practices, long term strategic planning, fulfillment of Directors obligations and fiduciary responsibilities and active participation at the Board and Committee meetings. The effectiveness of Board / Committee processes were assessed based on the Directors inputs received during the meetings of the Board and one to one meeting by the Chairman with the Directors.

EXTRACT OF ANNUAL RETURN:

The Extract of Annual return as on March 31, 2024 as per the amendment though MCA Circular dated 24/08/2020 is available in the weblink www.munothfinancial.com

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year under review, as stipulated under 34(2)(e) of SEBI(LODR) Regulations is presented in separate section forming part of the Annual Report as Annexure 2

DIRECTORS RESPONSIBILITY STATEMENT:

As required in Clause (c) of Sub- Section (3) of Section 134 of the Companies Act, 2013, your Director confirms and state that a) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures. b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the close of the financial year ended 31st March 2024 and of the Profit/Loss of the company forthe year ended 31st March 2024 c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities. d) The Directors have prepared the annual accounts on a going concern basis. e) The Directors, have laid down internal financial controls to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively. f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DEPOSITS:

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of balance sheet.

DIRECTORS AND KMP

Re appointment of Directors retiring by rotation

Pursuant to Section 152 of the Companies Act, 2013, Mr.Vikas Munoth and Mr. Bharat Munoth retire by rotation and being eligble offers themselves for reappointment

Information pursuant to Regulation 36(3) of SEBI (LODR) Regulations for Directors retiring by rotation and being eligible offers themselves for reappointment

Mr.Vikas Munoth is retiring by rotation at this Annual General Meeting and being eligible offers himself of reappointment Mr. Vikas Munoth, aged 47 years (Date of Birth : 26/03/1977) holds a Bachelor Degree in Commerce and holds a post-graduate diploma in Business Management specializing in Finance and Marketing. He is also a Chartered Financial Analyst and specialises in fundamental and technical analysis. He has extensive years of experience and knowledge in the field of Capital Markets. He is also the Director of Munoth Communication Limited and Munoth Industries Limited.

As on March 31,2024, his shareholding in the Company is 10,14,500 shares and has no shares held by/ for other persons on a beneficial basis.

He has attended all the 4 board meetings held on May 30, 2023,August 14, 2023,November14, 2023 and February 14, 2024. He is the director of Munoth Communication Limited and Munoth Industries Limited Disclosure of relationships between directors inter-se: Mr. Lalchand Munoth is the father of Mr. Vikas Munoth and Mr. Bharat Munoth & Mr.Jaswant Munoth are brothers of Mr.Vikas Munoth.

2. Brief resume of Mr. Bharat Munoth and nature of his expertise in specific areas.

Mr. Bharat Munoth is retiring by rotation at this Annual General Meeting and being eligible offers himself of reappointment. Mr. Bharat Munoth, aged 54 years (DOB:02/03/1970) is a commerce graduate and he has extensive knowledge and experience in the field of finance and investments.He is the director of the company since 1992.He is also the director of Munoth Communication Limited, Munoth Bioscience Limted, South India chemicals and Leasing Private Limited, Maharana Finance and Investments Private Limited and Shankeswar Finance and Investments Private Limited.

As on March 31, 2023, his shareholding in the Company is 7,17,900 shares and has no shares held by/ for other persons on a beneficial basis.

He has attended all the 4 board meetings held on May 30, 2023, August 14, 2023, November 14, 2023 and February14, 2024 Disclosure of relationships between directors inter-se: Mr. Lalchand Munoth is the father of Mr Bharat Munoth and Mr. Jaswant Munoth & Mr. Vikas Munoth are brothers of Mr. Bharat Munoth.

DECLARATION OF INDEPENDENT DIRECTORS:

The independent Directors have confirmed and declared that they are not disqualified to act as an independent Director in compliance with the provisions of Section 149 of the Companies Act., 2013.

ADEQUACY OF INTERNAL CONTROL, FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS:

The Company has in place adequate internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable material weakness in the design or operation were observed.

STATUTORY AUDITORS :

Members of the Company at the AGM held on August 18, 2022 had approved the appointment of M/s. Kumbhat & Co., Chartered Accountants as Statutory auditors for a period of 5 years from the conclusion of 31st AGM upto 36th AGM to be held in 2027..

SECRETARIAL AUDIT REPORT:

A Secretarial Audit was conducted in accordance with provisions of section 204 of the Companies Act,2013 and the Secretarial Audit Report dated 29/05/2024 given by Mr. N Selvam is attached as Annexure 3 and forms a part of the report of the Directors.

COST AUDIT:

Cost Audit is not applicable to the Company for the financial year 2023-24.

EXPLANATION / COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS.

There were no comments or observations or adverse remarks made by the Auditor or Practicing Company Secretary in their reports.

COMPLIANCE WITH SECRETARIAL STANDARDS:

The Company has complied with Secretarial Standards issued by Institute of Company Secretaries of India (ICSI) as and when it was applicable.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have any Subsidiary or Joint venture Company. The nil disclosure in Form No. AOC 1 is enclosed as Annexure 4.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

In line with the requirements of the Companies act, 2013 and equity listing Regulation, the Company has formulated a policy on Related Party transactions which is also available on Companys website at www.munothfinancial.com. The policy intends to ensure that proper reporting, approval and disclosure procedures are in place for all transactions between the Company and Related Parties.

All Related Party transactions are placed before the Audit Committee for review and approval, Prior omnibus approval is obtained for Related Party transactions on a quarterly basis for transactions whichare of repetitive nature and / or entered in the Ordinary Course of Business and are at Arms Length. The disclosures for the financial year in Form No . AOC.2, if any is enclosed as Annexure 5.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE:

There are no persons employed in the Company during the year or for part of the year who were inreceipt of remuneration in excess of the limits set out in Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 read with in terms of provisions of Section 197(12) of the Companies Act, 2013.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) rules, 2014 are provided in the Annual Report as Annexure 6.

VIGIL MECHANISM:

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Regulation, includes an Ethics & Compliance Task Force comprising Senior Executives of the Company. The policy on vigil mechanism and whistle blower policy may be accessed on the companys website www. munothfinancial.com.

CORPORATE GOVERNANCE REPORT:

Pursuant to Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, report on Corporate Governance is not applicable to the Company for the financial year 2022-23 since the Net Worth is below 25 Crores and the Paid up Capital of the Company is less than 10 Crores.

STOCK EXCHANGES:

The Companys shares are listed on BSE.

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct as per the Guidelines issued by the Securities and Exchange Board of India for prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Board of Directors and the designated employees have confirmed compliance with the code.

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review.

ACKNOWLEDGEMENTS:

Your Directors would like to express their gratitude to the Shareholders, vendors, bankers and customers for their support and co-operation. They wish to thank all the employees of the Company for their sincere and dedicated services.

ANNEXURE 1

Nomination and Remuneration Policy

The Remuneration/Compensation Committee of Munoth Financial Services Limited (“the Company”), was renamed as Nomination and Remuneration Committee by the Board at its meeting held on March 31, 2015

1.2 To evaluate the performance of the members of the Board and provide necessary report to the Board for further evaluation of the Board.

1.3 To recommend to the Board on Remuneration payable to the Directors, Key Managerial Personnel and Senior Management.

1.4 To provide to Key Managerial Personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations.

1.5 To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and to assist the Board in fulfilling its responsibilities.

2.1 Act means the Companies Act, 2013 and Rules framed thereunder, as amended from time to time.

2.2 Board means Board of Directors of the Company. 2.3 Directors mean Directors of the Company.

2.4 Key Managerial Personnel means Chief Executive Officer or the Managing Director or the Manager; Whole-time director; Chief Financial Officer; Company Secretary; and such other officer as may be prescribed.

2.5 Senior Management means personnel of the company who are members of its core management team excluding the Board of Directors including Functional Heads.

3.1 The role of the Committee inter alia will be the following: a. to formulate a criteria for determining qualifications, positive attributes and independence of a Director. b. to recommend to the Board the appointment and removal of Senior Management c. to carry out evaluation of Directors performance and recommend to the Board appointment /removal based on his / her performance. d. to recommend to the Board on (i) policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management and (ii) Executive Directors remuneration and incentive.

e. to make recommendations to the Board concerning any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an Executive Director as an employee of the Company subject to the provision of the law and their service contract; f. ensure that level and composition of remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and meets appropriate performance benchmarks, g. to devise a policy on Board diversity; h. to develop a succession plan for the Board and to regularly review the plan;

Policy for appointment and removal of Director, KMP and Senior Management 3.2 Appointment criteria and qualifications a) The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his / her appointment. b) A person should possess adequate qualification, expertise and experience for the position he/ she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position. c) The Company shall not appoint or continue the employment of any person as Whole-time Director who has attained the age of seventy years. Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

3.3 Term / Tenure a) Managing Director/Whole-time Director : The Company shall appoint or re-appoint any personas its Executive Chairman, Managing Director or Executive Director for a term not exceeding five years at a time. No re-appointment shall be made earlier than one year before the expiry of term. b) Independent Director: An Independent Director shall hold office for a term up to five consecutive years on the Board of the Company and will be eligible for re-appointment on passing of a special resolution by the Company and disclosure of such appointment in the Boards report. No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for appointment after expiry of three years of ceasing to become an Independent Director. Provided that an Independent Director shall not, during the said period of three years, be appointed in or be associated with the Company in any other capacity, either directly or indirectly. At the time of appointment of Independent Director it shall be ensured that number of Boards on which such Independent Director serves is as may be prescribed under the Act and / or the Listing Agreement. 3.4 Evaluation The Committee shall carry out evaluation of performance of every Director, KMP and Senior Management Personnel at regular interval (yearly).

3.5 Removal Due to reasons for any disqualification mentioned in the Act or under any other applicable Act, rules and regulations thereunder, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management Personnel subject to the provisions and compliance of the said Act, rules and regulations.

3.6 Retirement The Directors, KMP and Senior Management Personnel shall retire as per the applicable provisions of the Act and the prevailing policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management Personnel in the same position/ remuneration or other wise even after attaining the retirement age, for the benefit of the Company.

3.7 Policy relating to the Remuneration for the Managing / Whole-time Director, KMP and Senior Management Personnel

The Remuneration Policy of the Company for managerial personnel is primarily based on the following: Performance of the Company, potential of individual and, External competitive environment.

General a. The remuneration/compensation/commission, etc., to the Managing / Whole-time Director, KMP and Senior Management Personnel will be determined by the Committee and recommended to the Board for approval at the time of appointment. The remuneration / compensation / commission etc. of the Managing / Whole Time Director shall be subject to the prior/post approval of the shareholders of the Company and Central Government, wherever required. b. The remuneration and commission to be paid to the Whole-time Directors shall be in accordance with the provisions of the Act. c. Increments to the existing remuneration/ compensation structure may be recommended by the Committee to the Board which would be within the limits approved by the Shareholders in the case of Whole-time Directors and as per the Policy of the Company in case of others. d. Where any insurance is taken by the Company on behalf of its Whole-time Director, Chief Executive Officer, Chief Financial Officer, the Company Secretary and any other employees for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.

Remuneration to Managing / Whole-time Director, KMP and Senior Management Personnel a. Fixed pay: The Managing / Whole-time Director, KMP and Senior Management Personnel shall be eligible for a monthly remuneration as may be approved by the Board on there commendation of the Committee. The breakup of the pay scale and quantum of perquisites including, employers contribution to P.F, pension scheme, medical expenses, club fees etc. shall be decided and approved by the Board/ the Person authorized by the Board on there commendation of the Committee and approved by the shareholders and Central Government, wherever required. b. Minimum Remuneration: If, in any financial year, the Company has no profits or its profits are in adequate, the Company shall pay remuneration to its Whole-time Director in accordance with the provisions of Schedule V of the Act and if it is not able to comply with such provisions, with the previous approval of the Central Government. c. Provisions for excess remuneration: If any Whole-time Director draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without appropriate approvals, the Committee shall recommend the due course of action to the Board as and when required.

Remuneration to Non- Executive / Independent Director a. Remuneration / Commission: The remuneration / commission shall be fixed as per the limits and conditions mentioned by the Company and the Act. b. Sitting Fees: The Non- Executive / Independent Director may receive Sitting fees for attending meetings of Board or Committee there of, provided that the amount of such fees shall not exceed the amount as may be prescribed by the Central Government from time to time. c. Commission: Commission may be paid subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act. d. Stock Options: An Independent Director shall not be entitled to any stock option of the Company.

The functions of the Committee in relation to nomination matters include: a. Ensuring that there is an appropriate induction in place for new Directors and members of Senior Management and reviewing its effectiveness; b. Ensuring that on appointment to the Board, independent directors receive a formal letter of appointment in accordance with the guidelines provided under the Act; c. Identifying and recommending Directors who are to be put forward for retirement by rotation. d. Determining the appropriate size, diversity and composition of the Board; e. Setting a formal and transparent procedure for selecting new Directors for appointment to the Board; f. Developing a succession plan for the Board and Senior Management and regularly reviewing the plan; g. Evaluating the performance of the Board members and Senior Management in the context of the Companys performance from business and compliance perspective; h. Making recommendations to the Board concerning any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an Executive Director as an employee of the Company subject to the provision of the law and their service contract. i. Delegating any of its powers to one or more of its members or the Secretary of the Committee; j. Recommend any necessary changes to the Board; and k. Considering any other matters, as may be requested by the Board.

5. REMUNERATION COMMITTEE FUNCTIONS

The function of the Committee in relation to remuneration matters include: a. to consider and determine the Remuneration Policy, based on the performance and also bearing in mind that the remuneration is reasonable and sufficient to attract retain and motivate members of the Board and such other factors as the Committee shall deem appropriate allelements of the remuneration of the members of the Board. b. to approve the remuneration of the Senior Management including key managerial personnel ofthe Company maintaining a balance between fixed and incentive pay reflecting short and longterm performance objectives appropriate to the working of the Company. c. to delegate any of its powers to one or more of its members or the Secretary of the Committee. d. to consider any other matters as may be requested by the Board. e. Professional indemnity and liability insurance for Directors and senior management.

7. CHAIRPERSON The Chairperson of the Committee shall be an Independent Director. The Chairperson of the Company may be appointed as a member of the Committee but shall not be a Chairman of the Committee. In the absence of the Chairperson, the members of the Committee present at the meeting shall choose one amongst them to act as Chairperson.